How Russia sanctions bite the Kremlin


The West’s unprecedented step to sanction post-communist Russia [in the wake of the invasion of Crimea] proves that the liberal democracies no longer consider Russia as a responsible partner or an ally. But do the sanctions mean that the West has developed a strategic vision regarding Russia? One has doubts, says Lilia Shevtsova (left).

A look at Russia seems to confirm the conventional wisdom that sanctions regimes are ineffective in most cases, she writes for The American Interest:

Both Russian and European companies have proved adept at dancing around sanctions, aided by armies of Western lawyers and business people. For example, Gazprom, E.ON, Shell, and Austria’s OMV group signed a memorandum for a joint venture deal (bigger than the existing Nord Stream pipeline) at the St. Petersburg Forum in 2015. Some Western companies, like the German firm Siemens, have found ways to take part in supplying Crimea. Third, countries openly or secretly have been replacing European products on the Russian market. Finally, Germany, the architect of the EU sanctions, has demonstrated its inconsistency: Berlin’s support of the idea of Nord Stream-2 hardly fits the restrictive policy and allows other states to look for loopholes.

It always takes time for sanctions to bring results, but the architects of the sanction regime against Russia should be surprised at how soon it has brought damage, adds Shevtsova, a member of the Editorial Board for the Journal of Democracy:

  • First, sanctions have taken toll on elements of the Russian ruling class that are integrated into the West. One example: The losses due to frozen assets in the U.S. alone of an oligarch close to Putin, Yuri Kovalchuk, totaled $572 million, and the oligarch Rottenberg brothers sustained losses in Italy worth nearly $40 million.
  • Second, sanctions have exacerbated the economic recession in Russia: by accelerating capital flight and shrinking internal financial resources; by restricting Russia’s access to international financial markets and triggering a financial crunch; and by creating crisis of confidence in international business circles regarding Russia.

The political impact of the Western sanctions is more complicated, notes Shevtsova, [who delivered the National Endowment for Democracy’s 2014 Lipset Lecture on Russia’s Political System: The Drama of Decay]:

It is true that at the beginning the sanctions may have helped the Kremlin with its anti-Western mobilization: in December 2014, 72 percent of Russians believed that the sanctions were aimed at “weakening and humiliating Russia.” At the same time, 24 percent of respondents thought that Russia “had to reach compromise with the West and make concessions to get the sanctions lifted.”

By the end of 2015, 74 percent of respondents admitted that they had problems because of sanctions (31 percent did not have problems). About 58 percent of respondents were worried about Russia’s isolation (39 percent were not worried), and 75 percent argued that Russia should “normalize” its relationship with the West (16 percent said it should not). It is even more interesting that 62 percent of Russians said that they were not ready for the “substantial deterioration of their lifestyle” precipitated by the exchange of sanctions between Russia and the West (only 30 percent of respondents reported a readiness to sacrifice). ….

What do these numbers mean? They mean that already by the end of 2014, Russians no longer unconditionally supported the Kremlin’s anti-Western crusade and were no longer willing to pay for it. These polls prove that Russians’ readiness to accept sacrifices might not last indefinitely and that support for Kremlin policy has started to wane. The Russian experience may soon test a thesis: The initial rallying around the leader in response to external pressure sooner or later turns into anger toward the authorities whose actions caused the continuing economic hardship.

“The survival mechanism chosen by the Kremlin has only increased the divide within the elite and within society—between those who have been sheltered from the newly unfavorable economic and external environment and those who have felt the pain,” she concludes. “But even the sheltered are feeling growing uncertainty and even frustration, losing their belief that Putin will continue to be a good guarantor of their well-being.”


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